‘Fixed deposits rates are very good now, go for them’

Mint, Hindustan Times and NDTV, bring you a personal finance show, “Let’s Talk Money”. The weekly call-in show, anchored by Monika Halan, editor, Mint Money, and Manisha Natarajan, editor and senior anchor, special programmes, NDTV, aims to answer viewers’ questions about money-related issues. Here are edited excerpts from the show that aired over the weekend on NDTV Profit and NDTV 24x7.

Shubhankar Bhardwaj, 30, operations manager with a multinational company. Married, without children. Annual cost-to-company: R850,000.I am planning to buy a house in Noida. They will give possession by mid-2014. I have to pay them R27 lakh through a housing loan for 15-20 years. Here’s the catch: Somehow I feel that I should first build a corpus through an SIP (systematic investment plan) and then only go for that flat. Secondly, I feel that if I go for that flat now, I will have to continue paying rent as well as the EMI.Halan: Suppose there is a rent going and there is an EMI going, are you able to sustain that with your current income, and there is still a little surplus left? And you are confident that you are on a good growth path in your company and you are doing well?Bhardwaj: Yes Halan: I think it’s fairly clear that you should go for the house if your current income is enough; your increments are due. You cannot go wrong buying in the suburbs in Delhi. The corpus building can happen as your increment comes in, so you can start your SIP then.

Arka Roy Chaudhary, 25, student from Vancouver, Canada.Both my parents are around 60 years old. My father will retire from his job this month and he will be getting about R40 lakh as gratuity, PPF/EPF. In addition, he has around R7 lakh in his savings bank accounts. My mother also retired a few months ago. Of the R18 lakh she received, R13 lakh has been deposited in the senior citizens savings scheme, R1 lakh each has been invested in Reliance MIP, Religare MIP and Birla Sun Life MIP and R2 lakh has been put in JP Morgan Short-Term Income Fund from which an SIP of R8,000 per month is put into JP Morgan India Equity Fund (G). My father has estimated that post-retirement, he will need around R35,000 monthly for household expenses. Since my mother is already getting around R21,000 monthly from pension and interest, they need at least R14,000 more. Given that my father will have around R47 lakh to invest, from which he will have to generate at least R14,000 in monthly income, how should he go about investing?Halan: Rs 15 lakh more will go into the senior citizens savings scheme (maximum limit) and another R15 lakh into fixed deposits.

FD rates are very good now and lock into a five-year product. You will still have about R17 lakh left. What I want them to do now is to ladder out the investments, which means we buy products for six months, 1 year, 1.5 years, 2 years because one of the goals is that they should have money when they come to see you and your siblings; they would want to use money to travel abroad.

There is a product called fixed-maturity plan, which mutual funds offer. They do not guarantee returns, but they will give you indicative returns because returns are matched to the maturity of the products. Natarjan: And about Rs 5-10 lakh can go into balanced funds.